Kentucky Tables Action on ADW Regulation

Regulation would require ADW operators to be licensed.

Advanced Deposit Wagering regulations that would be among the stiffest in the country were tabled during the Kentucky Horse Racing Commission’s meeting Dec. 13 after objections were raised by the president of Churchill Downs Inc.

Kevin Flanery, president of CDI, which operates TwinSpires.com, one of the largest ADW operators in the country, strongly objected to a portion of the new Kentucky regulation that would require ADW operators to become licensed in Kentucky if they wanted to take wagers on any Kentucky tracks, even if the ADW company was not located in Kentucky nor if it had any Kentucky ADW clients.

Flanery said that requiring ADW companies to go through the extensive licensing process and pay a bond of as much as $500,000 required of ADW licensees would result in those companies not offering wagering on Kentucky races. The result could be a major decline in ADW handle, he said. Flanery was speaking more from the effect the regulation could have wagering on Churchill Downs races rather than how it would impact TwinSpires.com.

“My fear is that (ADW) people will leave the state of Kentucky and won’t take the Kentucky signals,” Flanery said.

Flanery said the commission’s objective of having an ADW regulation that would offer integrity to bettors was already achievable under the Interstate Horse Racing Act of 1978 that regulates transmission of simulcast signals.

“My point is that what you are seeking is already in place,” Flanery said. “Integrity is a concern to us also. The question is whether we are going to lose handle without any value added. (The proposed regulation of ADW operators) would be the same as saying an off-track betting operation in New York would have to come to Kentucky to be licensed. I don’t think anybody is suggesting that is the right thing to do.”

Susan Speckert, general legal counsel for the commission, and some members of a KHRC committee that had worked for nearly a year on the new regulation, defended the necessity of licensing ADW operators who take wagers on Kentucky races, regardless of where the ADW company or its clients are located.

Commissioner Tom Ludt, who served on the ADW regulation committee, said the issue was a “question of whether or not we want to be leaders on integrity.”

Ned Bonnie, a commissioner who also served on the ADW committee, said, “The concern is we have people taking bets on Kentucky races that are unregulated.”

Also supporting the Kentucky proposal was Mike Maloney, a professional gambler on horses and a horse owner and breeder. He acknowledged Flanery’s contention that some ADW operators, including off-shore betting companies, would boycott Kentucky racetracks rather than submit to the licensing and bond requirements under the regulation.

“I am concerned that companies would not want to participate in Kentucky (wagering),” Moloney said. “But I still believe it’s the right thing to do. I hope that the short-term impact on handle will go away because a lot of bettors out there want integrity.”

With only Bonnie voting “no” the commission tabled the regulation until the committee could try to resolve the issues voiced by Flanery. The earliest it would probably be re-considered would be February 2011.